NCLT Mandates Single Plan for Jaiprakash Associates Insolvency

The National Company Law Tribunal (NCLT) has ordered that Jaiprakash Associates should be acquired as a single entity, countering a proposal to split the company into clusters for sale. The decision followed a petition challenging the sale process, which violated Insolvency & Bankruptcy Code (IBC) provisions.

The National Company Law Tribunal (NCLT) has made a significant ruling regarding the acquisition of Jaiprakash Associates Ltd (JAL) through the insolvency process. The tribunal has mandated that resolution plans should be solicited for the entire company as a going concern rather than splitting its assets into various business clusters, a strategy previously attempted by the resolution professional.

The decision came after evaluating 'Form G,' a publication calling for Expressions of Interest (EOI) from potential buyers. Previously, the resolution professional had offered two options: selling JAL as an entire entity and splitting the company into different business segments. However, NCLT's Allahabad bench deemed the latter option as a violation of the Insolvency & Bankruptcy Code (IBC), emphasizing that IBC procedures must be sequential.

The ruling was prompted by a petition from Sunil Kumar Sharma, a member of JAL's suspended board, who argued against splitting JAL into clusters for sale. As a result, the tribunal has set aside the option for cluster-wise expressions until full-company bids are exhausted. If no suitable plans are proposed, NCLT may consider alternative selling strategies, provided procedures are followed lawfully.

(With inputs from agencies.)